Former Commodities Broker Sentenced to Four Years in Prison for Fraud That Caused Clients to Lose $1.3 Million
|U.S. Attorney’s Office February 26, 2013|
CHICAGO—A former commodities broker was sentenced to four years in federal prison for defrauding half a dozen customers of approximately $2.5 million and causing them to lose approximately $1.3 million. The defendant, Joshua T.J. Russo, 31, of Chicago, a former vice president of alternative investments for Olympus Futures Inc. (previously Peak Trading Group), was sentenced after pleading guilty last November to commodities fraud.
Russo was ordered to pay $1.175 million in restitution to the Joshua T.T. Russo Settlement Fund, which was established by the National Futures Association to be distributed to the victims. He was ordered to begin serving the sentence on May 24 by U.S. District Judge Charles Norgle, who imposed the sentence last Wednesday in federal court.
“Using falsified e-mails, account statements, and annual reports, Russo caused his clients to raid their IRA accounts and give him their hard-earned savings to purchase what he claimed were conservative investments that hedged against risks in the commodity futures markets. In reality, Russo placed highly speculative trades that routinely lost money,” the government argued at sentencing.
In pleading guilty, Russo admitted that between March 2007 and April 2011, he fraudulently obtained approximately $2.5 million from six investors and caused losses of more than $1.3 million, including approximately $208,000 in commissions for himself that he spent on gambling, vacations, clothing, theater tickets, meals, and entertainment. Russo obtained the funds by misrepresenting to investors that their money would be used to purchase various investments, including shares of the Peak Performance Fund, which he knew had never accepted individual investors and no money was ever invested with the fund. Russo made false statements about his prior performance investing in commodity futures, the level of risk, the existence and trading performance of the Peak Performance Fund, and the uses of the funds he obtained from investors.
Instead of investing the funds as he purported, Russo misappropriated the money to make speculative trades—and regularly lost money—in various commodity futures, including energy sources, precious metals, agriculture products, foreign currencies, and stock indices. After providing one investor with false information about positive returns, Russo successfully encouraged that investor to refer friends and relatives to open accounts through him, resulting in additional victims.
The sentencing was announced by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and Cory B. Nelson, Special Agent in Charge of the Chicago Field Office of the Federal Bureau of Investigation. The Commodity Futures Trading Commission and the National Futures Association assisted in the investigation.
The government was represented by Assistant U.S. Attorney Christopher McFadden.
The investigation falls under the umbrella of the Financial Fraud Enforcement Task Force, which includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit stopfraud.gov.